Josh Kim With 7a Accelerator

Intro: [00:00:04] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia, it’s time for high velocity radio

Lee Kantor: [00:00:13] Lee Kantor hear another episode of High Velocity Radio, and this is going to be a good one today. On the show we have Josh Kim and he is with 7a accelerator. Welcome, Josh.

Josh Kim: [00:00:25] Afternoon, Lee. Great. Great to be on with you today.

Lee Kantor: [00:00:28] Well, I’m excited to learn what you’re up to. Tell us a little bit about 7:00 A.. How are you serving, folks?

Josh Kim: [00:00:33] Yeah. So we we specialize in helping business owners navigating what is otherwise a confusing process of seeking SBA financing. I’ve got a bit of a back story myself with leveraging these SBA loans for a couple of my own business ventures in the past, and I have found that a lot of people are just not aware of what you can actually get done with an SBA loan. So we help business owners by consulting them through the process and helping make sure they get paired up with a good bank that’s going to be able to help them get the financing needs that they have.

Lee Kantor: [00:01:09] So why don’t we share with the listeners kind of a primer on how to go about getting an SBA loan? Because there’s a lot of misconceptions that the SBA loan isn’t really a loan from the SBA, right? You have to partner with the bank and the government backs it, but the loan is through a bank, right?

Josh Kim: [00:01:28] Correct, that’s that’s one of the biggest points of confusion that most people have is that they think, Oh, well, am I not getting a loan from the SBA? And there’s more confusion around that right now. Just because we do have like the idle loans and some of these other disaster loans that are out there. And so that that does sometimes create confusion. But the loans that I help people with with seven accelerator are ones that are directly from banks and they are just guaranteed by the SBA.

Lee Kantor: [00:02:02] So now who is eligible for an SBA loan?

Josh Kim: [00:02:07] Any for-profit business here in the United States is going to be eligible for an SBA loan. So a lot of people, you know, a lot of people have questions about that. What kind of business is going to qualify you anything special? And you know, the answer is no, not really. So long as you’re a for profit company based in the United States, you will be eligible for an escape.

Lee Kantor: [00:02:29] Now, do you have to have a business that has something that’s tangibly collateral, realizable like real estate or equipment or things like that? Or can service industries take advantage of SBA loans as well?

Josh Kim: [00:02:43] Service businesses are just as capable of just as able to take advantage of SBA loans as as others. Obviously, if you have collateral in your business, it does make the process a little bit easier. But it is not. A hard and fast rule is not an absolute requirement. And the reason that SBA loans are often used and they’re very popular is because the SBA, the way it works is that the SBA guarantee seventy five percent of the loan. And so what that allows is for a business owner who doesn’t have collateral, who typically might have difficulties in getting this kind of financing. It allows them to still be able to get a loan because the SBA, because the government is guaranteeing that’s that’s effectively how the program works and why a lot of business owners are able to in fact, get financing by utilizing the SBA process.

Lee Kantor: [00:03:39] Now what are some things that a business owner has to have in order to get the or have a, you know, the best chance of getting the SBA loan? And what are some things that if you don’t have it, then don’t even bother.

Josh Kim: [00:03:54] So what I would generally tell people is that if you don’t have any like if you don’t have any historical cash flow or profits in your business, SBA financing is probably not going to be a good option for you. The main thing that lenders are looking at is historical profits of the business by looking at a tax return. And so if you don’t have that, it’s it’s still possible in some situations to get an SBA loan, but it obviously makes a lot more difficult. Right? I would also tell people that if you need to work on your credit first, going for an SBA loan is not going to be a fruitful effort. They do have credit score minimums that are set by the SBA. And if you don’t fall in those, if you don’t fall within those parameters, it’s going to be difficult to qualify for financing. So can you get an SBA loan if you don’t have good credit? It’s it’s it’s actually cut off by the SBA, so I would encourage you to go work on your credit score first before trying to apply for financing. That’s that’s really the only other qualifier we give people.

Lee Kantor: [00:04:54] And then for business owners who have an existing business, they think they might have been kind of being smart by not showing any profit, right? By just putting their salary or the money that they’re taking out of the business and kind of not hiding the profit, but maybe just reallocating it in a

Josh Kim: [00:05:13] Different but yeah, writing it all off, right? That’s that’s honestly, that’s the most common problem that I see with people is that they do just that. And it makes a lot of sense from a tax perspective, because why would you why would you report any more profit than you absolutely have to get taxed on it? That’s that’s how most people think. And while that is the correct way to think about things most of the time, you know, unfortunately for the for the purposes of getting an SBA loan, that is that is not how it works and you will actually be disadvantaged by that. So.

Lee Kantor: [00:05:51] And that’s one of those things where if you’re thinking about this, you better start planning for this because it’s hard to kind of make a rapid change, right? Like if all of a sudden you want to get the loan and you could have shown, put this profit, you know, for the last two years, the would have probably helped you get it or maybe even a bigger loan than you needed. But now you don’t. You didn’t do that. You’re going to have to kind of do it at some point, right?

Josh Kim: [00:06:23] Yeah, I mean it it makes it more difficult if you don’t have cash. I have seen some people like we had a client recently, he went back and actually amended a prior tax return as most prior year’s tax return to not be as aggressive with some of the write offs. And you know what I mean by that is he, you know, he didn’t write everything off, right? And he went back to his tax returns so he could do that. I’ve seen situations where that’s done, but that’s really kind of the only way you would otherwise get around it. You know, you would have to go in and and make an adjustment to your tax return to show. You know, the profits that your your business had, so, you know, it’s doable, that’s really the only way you can kind of get around it.

Lee Kantor: [00:07:07] So now SBA loans right now are available, right? Like if you have the qualifications, they’re not. These aren’t difficult to get if you know what you’re doing, but they are available. This isn’t a time when it’s difficult to really get them right.

Josh Kim: [00:07:24] Yeah, no. I mean, now it’s it’s arguably the easiest it’s ever been because the the SBA has. It’s kind of they’ve provided frameworks and guidance for lenders to say like, Hey, you know, we want to make it easier for businesses to access this money. And they’ve they’ve adjust some of the rules and regs that it is easier for businesses to get money just, for example. Last year, one of the main things that they were doing throughout COVID was they were they were reducing the they increase the guarantee. So right now, the guarantee of seventy five percent, that’s that’s how much of a loan is guaranteed by the SBA. They had actually adjusted it during COVID so that it was even higher than that. The the the the percentage of the loan guarantee is 90 percent. So the SBA has done different things such as that to make it easier for businesses to actually get this money because, you know, at the end of the day, they want businesses to be able to obtain this financing. They want them to be able to do this because it will make it easier for us to collectively economically recover if businesses have the money to be lending. Volume went from 30 billion to forty five billion last year on account of, you know, just on the main SBA lending programs, not the Idol and PPP that disaster programs just the main lending programs. It increased by a significant amount.

Lee Kantor: [00:08:51] And with historic low interest rates, there’s it’s a good time that even if you don’t kind of urgently need the money, it’s a nice time to have the money.

Josh Kim: [00:09:03] Correct, correct. Now is the best time to borrow money. And a lot of people are like, Oh, why would I pay six percent interest on money that I’m not using? Well, the reason is because inflation right now is over six percent. So if you’re able to borrow money at or equal to the inflation rate, you’re effectively borrowing the money for free. Right, right. So I’ve made that case to a couple of business owners, but they don’t they don’t think that way. Well, I, you know, I don’t want to pay more than two percent. It’s wild because if you have a business where you, you’re not making enough money. If you can borrow an infinite amount of money at two percent and still not make money, you have a bad business model. It’s not about how much money can you borrow. You fix your business loan.

Lee Kantor: [00:09:47] So now let’s talk about how seven a accelerator helps their clients. What? What is kind of your ideal client profile?

Josh Kim: [00:09:57] So our ideal client profile is someone who is and we don’t necessarily based on revenue. It’s more based on the cash flow that this cash flow is what’s going to determine how much you qualify for. Our ideal client avatar is someone who is netting over five hundred thousand dollars a year and once Capital Capital to scale their business, whether it be for a business acquisition or real estate purchase, whatever the case might be. That is our ideal client avatar and kind of like who is easiest for us to work with? We work with business owners by helping them navigate the loan process of banks so we can still help smaller businesses that aren’t at those revenue and profit numbers. It’s just obviously a lot easier if they’re if they’re bigger.

Lee Kantor: [00:10:46] So, so like, let’s assume that this this prospect is at that exact level. What is the process look like? So they come to you and they say, Hey, Josh, I’m thinking of getting a loan. Where do you come in and how do you help them? Like, why can’t they just go to their bank and say, Hey, I want an SBA loan?

Josh Kim: [00:11:07] Yeah, so that’s actually probably the most common question we get, and it’s and it’s a logical question, why would you go to someone else if you can just go to your bank? Unfortunately for for most business owners, most banks are not good at executing on SBA loans. They might advertise it. They might claim to do it. But when you dig into the weeds of what they’re really able to do, most SBA lenders are just flat out awful at doing loans. If you look at the loan data from the SBA, for example, Bank of America, most people are a lot of people bank with Bank of America. You might think, OK, well, they’re a big thing. They’re obviously going to do a lot of loans. If you look at the actual data on how many loans they actually do in the year, it’s a very low amount. Same thing with Chase and Wells Fargo. If you look at the actual dollar amounts are proving to, it’s all very low dollar amounts. If you need a million dollars, good luck getting it from Wells Fargo unless you have just as much collateral to pledge personally, right? So that’s really the main reason is that, you know, I have a unique network of lenders that really understand how the SBA loan program was designed to work right, not not requiring all this collateral and this and that. And so that’s that’s the main benefit that I can demonstrate that we bring people is that, hey, we work with banks that are not going to be difficult with you in getting the financing you need. They’re going to be able to help you actually get get the money you want from an SBA. So that’s how we help. We work with banks to understand the program and are not crazy sticklers like some of the other, some of the other banks out there might be.

Lee Kantor: [00:12:45] And so those banks may not be in the, you know, close proximity of the client, right? They could be anywhere in the country.

Josh Kim: [00:12:52] Yeah, most most banks that are good at doing SBA loans are actually not going to have any sort of physical proximity to the client. And that’s that’s one of the one of the biggest things that confuses people. They’re like, Oh, well, you know, my neighborhood bank advertises SBA loans, they might advertise it, but it doesn’t mean they’re any good at it. That’s that’s a dichotomy that a lot of people have a hard time reconciling that just because, hey, they claim they do, it doesn’t mean they’re any good at it.

Lee Kantor: [00:13:17] Now, are you actually helping them with the forms or is it something like, you’re like, Look, here’s the form, fill it out, and then I will get it to the right bank. Like, where? Where does your service begin and end?

Josh Kim: [00:13:30] Yeah. So we do help answer questions about how to fill out the forms of such. That’s really not the core of where our value add is because the forms are the forms are actually pretty self-explanatory. One of the biggest myths that I tell people is that SBA loans are not complicated. They don’t require, you know, they don’t require you to have a CFA license to be able to fill out the forms, right? They’re actually pretty, pretty straightforward so we can help answer questions as they come up. But really, we’re more of we’re at where we are. Adding value is by making sure that the business owner is getting paired up with the best bank for their business.

Lee Kantor: [00:14:13] Now is there a ratio based on profits or revenue, gross revenue that tells you how big of a loan you should go for? Like, what’s the kind of the the formula of deciding what’s the appropriate amount to to get a loan for?

Josh Kim: [00:14:31] Yeah, that’s that’s actually a pretty good question. And one I one we get often. Hey, how much how much money can I qualify for? I tell people that a good rule of thumb is going to be three times your your annual net income. That’s kind of a good ballpark range of how much you can qualify for based on a 10 year term loan at five and a half percent, which is where most of these SBA loans are coming, right? They’re panning out to be right now. So it also depends on what you need. If you don’t need that much money, there’s really not much of a point to to go apply for that much, right? You only need one hundred thousand dollars, but you can qualify for three hundred and you can only justify spending one hundred thousand dollars with what you need. You could try applying for three hundred thousand, but you might have a hard time justifying it to the bank as to why you need that full amount. And that’s that’s one of the things that I tell people is that you have to be able to justify the loan amount, not just show that you can cash flow it with the profits of your business, right?

Lee Kantor: [00:15:34] And then the way that you’re kind of going to justify it is you’re going to explain how you’re going to use the money or is it something that you have to be in the process of buying something?

Josh Kim: [00:15:46] No, no, no, no. Most of the loans that we help business owners out with are actually not loans for business acquisitions. I mean, we do business acquisitions, real estate, you know, real estate purchases. But a lot of the loans that we do are just for expansion capital like, Hey, I have a business that does X amount per year. I’m interested in getting financing to help expand the business here. So I’m. Money I need. So we run into a lot of situations like that, and so it’s not an absolute requirement that you per say, have a purchase or something you have to do. Know we do plenty of loans for people who do not have a business acquisition or something like that that they’re working on.

Lee Kantor: [00:16:28] So if somebody out there wants to learn more, have a more substantive conversation with you or somebody on the team, what is the website?

Josh Kim: [00:16:37] Best way to reach us is to the website at seven accelerators. And again, that’s seven the number seven accelerator. We have a we have a link there where you can just click Schedule Call. If you’d like to have a conversation, see if an SBA loan would be a good fit for you. Got a team of guys who take the calls and be happy to chat with you to see if it might be a good fit?

Lee Kantor: [00:17:00] And before we wrap, is there a story you can share? Maybe a success story about somebody you were able to help, you know without naming their name or anything?

Josh Kim: [00:17:08] Yeah. Well, we won one of the more recent success stories that we have that I was glad we were able to get done was for a it was a husband wife combo there. There they were trying to buy the accounting firm from their dad. And so they had gone to a bank for two before who turned them down. The dad was retiring. They needed about a million dollars to purchase the accounting firm from him, and we were able to get one of the lenders that we work with to to approve the deal for them. So they were able to take the keys and, you know, buy the business that they had been working at for multiple years. And so they were obviously very excited about that. Glad we were able to get it done for them. But that’s just one of the recent success stories that I can I can point out for you.

Lee Kantor: [00:17:57] And then also one of the benefits is not only the ability to match the right lender with the right client, but it’s also maybe you help with the speed of getting these deals done.

Josh Kim: [00:18:09] Right, and that’s that’s that’s why we refer to the business as an accelerator, a big, a big component of what we’re doing is helping the business owners get it done in a quicker fashion than they would otherwise. Because, you know, a lot of these business owners, could they have gotten the SBA loan on their own? Probably. But they just didn’t want to have to wait multiple months of back and forth and talking to multiple banks to figure out who’s actually going to be able to help them and who’s just kind of blowing smoke. So that’s that’s that’s a big aspect of what we do is helping them navigate who’s who’s legit, who’s going to help them and who’s not right.

Lee Kantor: [00:18:48] What’s your personal best in terms of getting a deal done?

Josh Kim: [00:18:53] I mean, my personal best is probably one of the deals that I did myself. I mean, I used SBA loans to buy some businesses when I was quite young, 19, 20 years old. And so one of the businesses that I bought was doing $3 million in revenue a year. I think that was probably my best deal because it was when I was able to get done on my own. But, you know, for a client, I think that that accounting firm purchase was definitely one of one of the more challenging ones that we’ve had to overcome. There was a lot of different issues with it that we had to work through. There was some financial issues with the historical performance of the business, and the buyers didn’t have perfect credit, but we were still able to get a lender on board and get the deal done. And really, that’s all that matters. So.

Lee Kantor: [00:19:40] Well, Josh, congratulations on all the success one more time.

Josh Kim: [00:19:43] The Website seven accelerator number seven accelerator cap.

Lee Kantor: [00:19:49] Good stuff. Well, thank you so much for sharing your story. You’re doing important work. We appreciate you.

Josh Kim: [00:19:54] Awesome. Good. Good talking with you guys and looking forward to talking again in the future.

Lee Kantor: [00:19:59] All right, this is Lee Kantor. We’ll sale next time on high velocity radio.